SBA Form 413 is the personal financial statement an SBA lender asks every owner of 20% or more, and every other guarantor, to complete and sign. It lists what the person owns, what they owe, their income, and debts they could become liable for, such as guarantees of other loans. Lenders use it to judge the guarantor's liquidity and net worth, to confirm where the equity injection is coming from, to build global cash flow, and to find personal collateral. Value assets at what they would fetch today and list every contingent liability.
- Full name
- SBA Form 413, Personal Financial Statement (PFS)
- Who signs
- Each owner of 20% or more, and any other guarantor
- Programs
- SBA 7(a) and 504, and other SBA programs
- What it shows
- Assets, liabilities, income and contingent liabilities, with supporting schedules
- Lender uses
- Liquidity, net worth, source of equity, global cash flow, personal collateral
- Signed under
- A certification that it is true; false statements to SBA are a federal offense
Who fills it out
SBA requires every owner of 20% or more to personally guarantee the loan, and a guarantee is only as good as the person who gives it. So each of those owners completes Form 413. So does anyone else the lender asks to guarantee, such as an owner below 20% or a spouse who holds assets being pledged.
Married applicants often ask whether the spouse must sign. The answer depends on how assets are owned and on state law. Where the home or accounts are held jointly, the lender needs to see them, and in community property states it may need the spouse's information to understand what the guarantor actually controls. Signing a financial statement is not the same as guaranteeing the loan; see does my spouse have to sign the personal guarantee.
In an acquisition, the people completing Form 413 are the buyers: the individual buyer, each partner at 20% or more, and any investor at that level. The seller does not, once fully bought out.
What goes on the form
The front page is a balance sheet for one person, plus income. The schedules behind it show the detail that supports each line. A lender reads the schedules first.
| Section | What goes there | How to value it |
|---|---|---|
| Cash and savings | Checking, savings, money market balances | The statement balance on the date of the form |
| Retirement accounts | IRAs, 401(k)s and similar | Current balance; say whether it is vested. Lenders discount it for taxes and early-withdrawal cost |
| Stocks and bonds | Brokerage holdings, listed by security | Market value on the date of the form |
| Real estate | Home, rental properties, land, with each mortgage | What it would sell for today, not what you paid; name the lender and balance on each loan |
| Business interests | Ownership in operating companies | A realistic value; lenders look past the value of the business they are financing |
| Life insurance | Policies held, with any cash surrender value and loans against it | Cash surrender value, not face value |
| Autos and personal property | Vehicles, other significant assets | Resale value; lenders give it little weight |
| Notes and accounts payable | Personal loans, lines, credit cards, notes to others | The balance owed and the monthly payment |
| Unpaid taxes | Income or property tax owed and not yet paid | The amount due and when |
| Contingent liabilities | Guarantees, co-signed loans, legal claims | The full amount you could be called on for |
| Income | Salary, investment income, rental income, other | Annual amounts that match your tax returns |
Contingent liabilities: the section people leave blank
A contingent liability is a debt you do not owe today but could owe tomorrow if someone else fails to pay. The most common are personal guarantees of other business loans, guarantees of commercial leases, co-signed loans for family members, pending lawsuits and a tax bill still being determined. Owners with more than one company often guarantee debt at each of them and forget to list any.
Lenders find these anyway. A personal credit report shows many guarantees; business tax returns and the affiliation questions on Form 1919 show the other companies; lease and loan documents show the rest. An omission makes the whole statement look unreliable, while a complete list lets the lender weigh the actual exposure, which is often small next to the guarantor's resources.
List every guarantee you have signed, at the full amount of the obligation, even where you think the other business is healthy.
How lenders use it
Liquidity. Cash and marketable investments show whether the guarantor can support the business if results dip, and whether the buyer really has the equity injection. For a start-up or a complete change of ownership, SBA requires an equity injection of at least 10% of total project costs; the lender traces where it comes from, and Form 413 is where it expects to see it first. See how much equity you need to buy a business.
Global cash flow. The income and personal debt payments on Form 413 feed the global cash flow analysis, which tests whether the business and the owners together cover all their obligations. SBA looks for coverage of at least 1.0x globally, including the owners, alongside at least 1.15x at the business. A mortgage, car loans and card balances on the PFS can decide a borderline deal.
Collateral. Where business assets do not fully secure an SBA loan, SBA lenders are expected to look to available personal collateral, and the real estate schedule is where they find it: each property, its value and the mortgage against it. See will an SBA loan take my house as collateral.
Consistency. The lender compares the PFS with personal tax returns, bank statements and the credit report. Rental income on the form should appear on the return; a brokerage account should show up in the statements; a mortgage balance should match the bureau. Differences are not fatal, but each one becomes a question.
Getting it right the first time
- Date it recently and use balances from the same date throughout. A statement several months old will be sent back.
- Use current market values. Inflated home or business values are the most common reason a lender re-states a PFS, and a re-stated statement loses credibility.
- Separate what is yours from what is joint. Say how each asset is titled.
- Don't count the business being bought. Its value is the lender's collateral already; listing it as the buyer's personal net worth double counts.
- Show the source of the equity injection as a clear cash balance, and be ready with statements showing it has been there, or where it came from.
- Keep a copy. Lenders ask for an updated statement at closing and often annually afterward.
Transparent's SBA checklist asks for a PFS from each 20%+ owner alongside two to three years of personal tax returns, because the lender reads them together. Transparent's lender package lays the guarantors' liquidity and global cash flow next to the business figures, so the lender sees the whole credit rather than assembling it from attachments.
Form 413 outside SBA lending
Banks and private lenders often accept Form 413 for conventional loans too, or use their own personal financial statement with the same sections. The purpose is the same wherever a personal guarantee is required: to show what stands behind it. A well-prepared Form 413 can usually be reused, updated to a current date, across lenders in the same process.
Common questions
- Does my spouse have to complete Form 413?
- Only if the lender needs the spouse as a guarantor or needs to see jointly held assets. In community property states the lender may ask for the spouse's information to understand what the guarantor controls. Signing a financial statement is separate from guaranteeing the loan.
- Should I include my retirement accounts?
- Yes. List them at current balance and note whether they are vested. Lenders count them as a weaker form of liquidity than cash, because withdrawing them early costs taxes and penalties, but they still show the guarantor's resources.
- How recent does the personal financial statement need to be?
- Recent: dated within the last few months and updated at closing. Lenders commonly send back an old statement and ask for a new one, so date it close to when the package goes out.
- What if my net worth is low?
- SBA does not set a minimum net worth for guarantors. A modest statement that is accurate is better than an inflated one. The lender weighs it with the business's cash flow, the equity injection and the collateral.
- Is Form 413 shared with anyone outside the lender?
- It goes into the lender's loan file, which SBA can review. The information is used to underwrite and service the loan.